Try SYNNEX Calls to Catch Earnings Bump

Advertisement

Next week kicks off the fourth quarter earnings season, with Alcoa (NYSE: AA) leading things off on Monday. The truth of the matter is that next week is rather slow on the earnings front, as just a handful of S&P 500 names are reporting. Yes, two of them are Intel (NASDAQ: INTC) and JP Morgan Chase (NYSE: JPM). The real action starts the following week, though, with Apple (NASDAQ: AAPL), Citigroup (NYSE: C), eBay (NASDAQ: EBAY), Goldman Sachs (NYSE: GS), General Electric (NYSE: GE), and several other heavy hitters on the schedule.

But let’s focus on next week for now. Putting aside Intel and Chase for later, we’re looking at a less familiar name. It’s contract manufacturer and distributor SYNNEX Corp. (NYSE: SNX), which reports after the close on Tuesday, Jan. 11.

You may not have heard of SNX, but don’t discount the fact that the company has a spotless earnings record since going public in late 2003. That’s right; SNX has met or beaten every quarterly estimate in its history. And the stock moves after earnings. Following the past two reports, the stock has gained nearly 7% on average in just one day.

On the chart, the stock is consolidating into its rising 20-day moving average as it trades close to its all-time high around the 33 mark. A boost from earnings could put the stock in uncharted territory.

SYNNEX Chart

On the sentiment front, the stock could be helped by the shorts and low analyst coverage.  With a short-interest ratio hovering around 12, a short squeeze is a very real possibility.  And with just seven analysts following SNX, the stock could be aided by new coverage.

Should SNX keep its perfect earnings record intact, technical support and skeptical sentiment point toward a post-earnings spike to new highs. Though the option spreads are a little wide due to low volume, the SNX Jan 30 Call is tolerable in the $2.50 range.  Stick with the January series since the option has eight post-earnings trading days before expiration on January 21. That should be plenty of time to capture a solid move higher.


Article printed from InvestorPlace Media, https://investorplace.com/2011/01/try-synnex-calls-to-catch-earnings-bump/.

©2024 InvestorPlace Media, LLC